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2017 (4) TMI 1032 - HC - Income TaxDisallowance of deduction u/s. 80IB of the Act on account of Central Excise Refund - Held that:- Apex Court in the case of Commissioner of Income-Tax v. Meghalaya Steel Limited [2016 (3) TMI 375 - SUPREME COURT] approved the decision of Delhi High Court rendered in case of CIT v. Dharam Pal Prem Chand Limited [2008 (11) TMI 231 - DELHI HIGH COURT] in which, it is held that the refund of excise duty should not be excluded in arriving at the profit derived from business for the purpose of claiming deduction under Section 80-IB of the Act Deduction u/s 80IB on account of disallowance of remuneration under Section 40 (b) and disallownace under Section 43B - Held that:- The present Tax Appeal deserves to be dismissed qua the same in light of the recent CBDT Circular No. 37/2016 [F. No. 279/MISC/ 140/2015/ITJ] dated 2nd November 2016 wherein the Board has accepted the settled position that the disallowances made under sections 32, 40(a) (ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VIA is admissible on the profits so enhanced by the disallowance. Accordingly, henceforth, appeals may not be filed on this ground by officers of the Department and appeals already filed in Courts/Tribunals may be withdrawn/not pressed upon Deduction under Section 80IB on account of disallowance of R&D expenses - Held that:- A.O. Has made this disallowance holding that the profits of the appellant were overstated on account of no expenses being debited for R&D facilities. The appellant has submitted that the reimbursement expenses were made to cover a host of facilities and services that were availed of from SPIL and that the expenses on account R&D for products developed and launched were included in that. As find that the notional disallowance on account of R&D expenses has been made on similar lines as the disallowances made for royalty, management fees and selling and distribution expenses. As discussed above, the said notional disallowances were found untenable by the Tribunal and were deleted in its order dated 12.06.2012. No additional facts have been brought on record to support the notional disallowance on account of R&D expenditure. Accordingly, following the rational behind the Tribunal's decision on the disallowances of royalty etc., the disallowance on R&D expenses is deleted and the ground raised by the appellant is allowed
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